Barry Callebaut CEO warns of “unprecedented volatility” over company’s nine-month results

The CEO of Barry Callebaut, Peter Feld, has asserted its digital transformation plans remain on track, despite the company’s latest nine-month results for chocolate volumes being 6.2% down in the quarter amid “an unprecedented” 43% year-on-year cocoa price rises, reports, Neill Barston.

Globally, the company noted that volumes of cocoa production are down 22% for the quarter, amid weaker consumer demand for premium ranges due to broader economic challenges.

As Confectionery Production has reported, the past 18 months has seen significant price volatility within the cocoa market, as prices have more than tripled to $12,000 a tonne on commodities markets, before dipping to under $10,000 in recent months.

This has placed the confectionery sector under notable strain, with smaller enterprises and major corporations alike facing continued pressure as production costs mount, which have been passed on to consumers. Consequently, this has seen chocolate sales fall in the US, amid constraints on household budgets.

For its part, Barry Callebaut’s latest nine-month results revealed that despite market headwinds, its sales revenues had held firm, with its third quarter performance up 56%, to CHF 10.9 billion for the first nine months of the year. However, with increased operating costs, these gains have been notably impacted.

In its outlook the business noted that in light of such challenging conditions, the group has revised its full year guidance. It now expects a mid single-digit decrease in Global Chocolate and a double-digit decrease in Global Cocoa. It noted that this equated to around -7% volume decrease and a mid to high single-digit increase in earnings for the 24/25 calendar.

Commenting on the results, Peter Feld noted that it would continue to work closely with its key partners, with further measures including reducing its cost base anticipated.

He said: “Over the past 18 months our industry has faced unprecedented disruption and volatility. Consistent with our commercial model, we have priced through the cocoa price increases to our customers.

“Meanwhile, customers are managing end-consumer price increases, causing short-term B2B disruption, further impacting our volume. The third quarter was impacted by our prioritisation of volumes in the Global Cocoa business. We are working closely with our customers to develop more cost-effective solutions, leveraging the comprehensive strength of our full chocolate solutions portfolio. At the same time, our BC Next Level investment programme is enhancing our agility and resilience to cocoa bean price volatility, with an emphasis on optimising returns and reducing leverage.”